Organised Retail Market Set to double in 3 years to US$ 30 Billion: FICCI-E&Y Report

The sector, which now accounts for a meager 5% of the total market (worth US$ 280 billion, inclusive of unorganized sector), is projected to account for 30% of the market size in the next 10 years. This prognosis is held out by a FICCI-Ernst & Young Report on Winning with Intelligent Supply Chains.

The highlights of the report, released at a press conference in New Delhi on Dec 10, mentions: The low penetration levels of organized retail in India and the fact that the market size is set to grow at a frenetic pace, provide a huge potential for retailers to tap a highly unexplored market.

The findings of the report were presented to the media by Mr. Rajan Bharti Mittal, Chairman, FICCI Retail Committee and Managing Director, Bharti Enterprises Ltd., Dr Amit Mitra, Secretary General, FICCI, and Mr. Pinakiranjan Mishra, Partner, Ernst & Young (E&Y).

Speaking on the occasion, Mr Mittal said, Organized retail will co-exist with unorganized retail. Thats the way it has been in developed nations like US and UK, and thats what we see in future here.
The report states that the high growth achieved by the economy in recent years, a youthful population having a large propensity to consume and easy availability of credit at low interest rates have been the key drivers of organised retail.

Yet, there are challenges that the sector faces, which need to be addressed forthwith. These include:

Inadequacies in infrastructure such as lack of high quality road networks, power shortages and insufficient storage spaces
With availability of retail space serving as a key enabler, the current rise in property prices and rentals may render a few retail business models unviable
The retail industry loses to the tune of US$120 to US$130 million every year in frauds, thefts and employee pilferage, shop lifting, vendor frauds or inaccurate supervision despite using standard and modern security features
Multiple taxes at the federal and state level
Lack of clear policies (especially on the entry of foreign retailers)
The industry also faces a huge shortage of experts in areas such as supply chain and store management
The most significant challenge that impedes the development of an efficient and modern retail sector is an underdeveloped supply chain

Talking about the upcoming conference, Mr. Rajan Bharti Mittal said, In a bid to find credible answers to the problems bedeviling the organized retail sector in India, FICCI is organizing a global conference on backend retail supply chains. Winning with Intelligent Supply Chain 2007 (WISC 07) in New Delhi on December 17-18, 2007. The key to efficiency in todays supply chain is the adoption of standards that can be benchmarked with global best practices.

Says Mr. Rajiv Srivastava, General Manager, Enterprise and Partner Group, Microsoft Corp. India: The role of IT in creating an intelligent supply chain cannot be over-emphasised. Its role will become really evolved to allow producers to trade where they want, cut back on delivery time and increase efficiencies. For instance, through the use of IT, it would be possible to route a truck with supplies to a store that has just run out of stock. And that will spell efficiency and profits for the enterprise.